A trust is a legal arrangement designed to manage assets on behalf of beneficiaries. A trust is a fiduciary relationship in which the grantor, who owns the assets, transfers them to a trustee.
The trustee then manages these assets for the benefit of the beneficiaries specified by the grantor. The primary purpose of a trust is to ensure that assets get distributed according to the grantor’s wishes, even after their death.
Parties involved
There are three main parties involved in a trust: the grantor, the trustee and the beneficiaries. The grantor is the individual who creates the trust and transfers ownership of the assets into it.
The trustee is responsible for managing the trust assets and distributing them to the beneficiaries in accordance with the terms outlined in the trust document. Beneficiaries are the individuals or entities who will ultimately receive the benefits of the trust, which can include financial support or assets.
Types of trusts
Trusts come in several forms, each serving different purposes based on the grantor’s goals and needs. Some common types of trusts include revocable trusts, irrevocable trusts, living trusts and testamentary trusts.
Revocable trusts allow the grantor to modify or revoke the trust during their lifetime, while irrevocable trusts cannot undergo adjustments once established. Living trusts get created during the grantor’s lifetime and can help manage assets while they are still alive.
Assets held in a trust are typically shielded from creditors and legal judgments, providing a layer of protection for beneficiaries. Additionally, trusts can help prevent the probate process, increasing the chances of a smoother and more efficient distribution of assets to beneficiaries.
